Hubei Century Network Technology (SZ:300494) GF SECURITIES·2024-05-08 07:02Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 15.80 CNY per share, indicating an expected upside from the current price of 12.83 CNY [25][39]. Core Insights - The company reported a revenue of 1.329 billion CNY in 2023, a decrease of 19.84% year-on-year, and a net profit of 169 million CNY, down 23.81% year-on-year. Adjusting for stock incentive expenses, the net profit would be 195 million CNY, reflecting a decline of 16.60% [29][34]. - The company has a rich pipeline of new games, with significant titles expected to launch in 2024, including "The Great Voyage: Sea Overlord" and several other games, which are anticipated to drive revenue growth [38][60]. - The introduction of the AI music social product "Give Mic" aims to enhance user engagement and monetization capabilities, leveraging AIGC technology [38][69]. Financial Performance Summary - The company’s revenue projections for 2024-2026 are 1.456 billion CNY, 2.215 billion CNY, and 2.859 billion CNY, with year-on-year growth rates of 9.6%, 52.1%, and 29.1% respectively. Net profits are expected to be 187 million CNY, 282 million CNY, and 396 million CNY, with growth rates of 10.2%, 51.3%, and 40.4% respectively [51][38]. - The company’s gross margin for the advertising and value-added services segment is projected to improve, with a focus on higher-margin social products [47][69]. Business Segment Analysis - The gaming business is expected to contribute significantly to revenue, with a projected income of 3.15 billion CNY in 2024, driven by new game launches and existing IPs [67]. - The network advertising and value-added services segment is anticipated to generate 878 million CNY in 2024, with a focus on AI-driven applications to enhance user engagement and revenue potential [69].